Politicians Trying To Prevent Car Insurers From Using Credit Scores Against Drivers
Every driver who is at least 18 years of age has a credit score. This is an evaluation of your credit history based off of your Social Security number. For example, if a person has paid all of their bills on time every month and has very little debt then they will have a very high credit score. Those individuals who have a lot of debt and delinquent accounts will have much lower credit scores.
Many car insurance companies are using these scores in their risk formulas. Some politicians have tried to block this from happening because they deem it to be an unfair practice. One such bill to prevent this has been brought up by three politicians.
The bill is called H.R. Bill 6129. It is known by its much longer name: Ban the Use of Credit Scores in Auto Insurance Act. The measure has been proposed by democratic congressmen who feel that consumers should not be subjected to credit checks during the underwriting of car insurance policies.
Many younger drivers feel that allowing one’s credit score to be taken into consideration is unfair in today’s job market and economy. Many drivers under the age of 25 exit college with thousands of dollars in debt. This puts them at a huge disadvantage because they are the target group of drivers who pay the highest insurance premiums due to the fact that they are young and not as experienced behind the wheel.
The three democrats have stated that car insurance rates are much too high for drivers right now and that using credit scores to determine risk is simply not fair. They feel that a person’s driving record should speak for themselves when determining risk. For example, a person with a bad credit score might be a great driver while someone with perfect credit may be a hazardous driver who gets a lot of traffic tickets.
Some insurance companies have stated that a credit score does impact risk. For example, if a person does not pay their bills on time then they might default on paying their monthly car insurance premiums on time. If this happens, the insurance company would lose money and the driver would become uninsured. There are currently millions of uninsured drivers on the road and every time that they become involved in a car accident they cost insurers and policy holders money.
The three politicians cited that this is an unfair practice which targets minorities, the poor, and those with financial issues and punishes them even further. Having bad credit makes life very difficult for drivers. It is still up in the air as to whether or not this bill will move forward but many people have expressed their support for it.